This is an excellent article that explains why our real estate market is strengthening, particularily at the higher end. Essentially, as hiring is happening in the oilfields, the local economy strengthens, confidence returns to consumers who then are willing to buy higher priced items, such as homes. In August of 2010, there were 67 MLS sales over $700k, this year there were 104. I also see strong activity in the New Home sector where a building/lot sale price can easily top that price level and many builder sales don’t get posted through the MLS system, making the sales numbers even stronger.
There is also good activity at the low end of the market as savy investors pick up properties for rental.
STRENGTHENING OIL SECTOR TO BOOST REAL ESTATE
Where oil goes, so goes Calgary.
As much as we like to say the city isn’t as dependent on black gold for its health and prosperity, the fact is, we are.
With oil prices regaining strength and with hiring happening in the oilfields, the economy is beginning to strengthen – and it’s pulling consumer confidence along with it.
A real estate axiom says that when the economy is good, the pace of home sales at the higher end of the market increases.
People in those income brackets aren’t likely to buy if there is an indication the economy is headed south.
“That’s probably true,” says Norb Park, managing broker with Sotheby’s International Realty Canada. “The businessminded are probably saying the economy is heading in the right direction, the oilpatch is in good shape, so this isn’t a bad time to deal.”
Resale housing statistics from the Calgary Real Estate Board tend to agree.
From the start of the year to the end of August, 948 homes priced at $700,000 and more changed hands, up from 779 for the same eight-month period in 2010.
In August, sales in that price range totalled 104 compared with 67 for the same month a year ago.
“There’s a mindset that when oil is doing well, then the economy must be good,” says Park. “That, in turn, increases consumer optimism – and right now, people are feeling positive.”
But not all of us can afford homes that expensive.
Matter of fact, nearly 50 per cent of single-family homes sold this year and last were priced between $300,000 and $450,000.
“With Calgary’s energy sector slated to grow, it is expected to lift the city’s employment, income and in-migration – and in turn help contribute to growth in the resale market,” says Sano Stante, president of the Calgary Real Estate Board. In-migration refers to the migration of people to the city.
“We expect price growth to improve as we approach the end of 2011 and move into 2012,” he says, adding the market is seeing a boost in sales at both ends of the market.
“Improving economic conditions, coupled with affordability and price stability, has given Calgary a boost in buyers for upperend homes and entry-level condos,” he says.
CREB also reports the average price for singlefamily resale homes reached $468,051 by the end of August, a one-per-cent increase compared to last year.
Taking a page from the RBC affordability reports, Stante says: “When looking at Canada’s major cities, Calgary is one of the most affordable regions for homeownership in the country. Buyers are benefiting from improved selection at all price ranges in the market.”
The single-family home market had 1,106 sales in August, an increase of 28 per cent when compared to the same month last year – which, by the way, was the lowest for August since 1994.
Sales of 9,485 for the start of the year to the end of August are 10-per-cent higher than the same period last year.
Condo sales totalled 468 units in August 2011, with a year-to-date total of 3,885 – similar to levels recorded in the first eight months of 2010.